The battery doesn't have to be small if you're okay with moderate thickness. And a lot of power goes to the screen so that cancels out. To the extent that this is true, you're just restating "push for thin" and it's not a separate problem.
Lower performance than what? I'm not convinced that's a real issue unless you're trying to make a flagship.
Why couldn't you fit a top-tier camera? That's like a square centimeter.
I was thinking much larger optics and mechanicals, similar to a PowerShot N (except with modern video specs): Optical image stabilization, 8x optical zoom, 1/2.3" Sensor (6.17mm x 4.55 mm), Maximum aperture F3–5.9, Macro focus range 1cm. A real camera: even though I realise in the past there have been plenty of failed camera-phones in the marketplace!
Lower performance than what? I'm not convinced that's a real issue unless you're trying to make a flagship.
Why couldn't you fit a top-tier camera? That's like a square centimeter.